I have always had issues with package management with this LMCE installation (not just this MD, but the core also). When I go into "Software Packages" in the Setup Wizard, I get a blank list. I think it somehow ties into the fact that my internet connection wasn't working when I did my initial core install.

Once you've altered the file on the core any MDs you create in the future will have the correct preferences file. The lastest libxine1 is not in the deb-cache because it was downloaded after initial installation. Currently the deb-cache is kept updated after the initial installation. Your MD will grab the proper packages if you alter the preferences files as shown above.

I have always had issues with package management with this LinuxMCE installation (not just this MD, but the core also). When I go into "Software Packages" in the Setup Wizard, I get a blank list. I think it somehow ties into the fact that my internet connection wasn't working when I did my initial core install.

This is normal, there is nothing currently listed under 'Software Packages' in 0810.